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Beta-Creaming

18 Pages Posted: 12 Feb 2015  

Jostein Lillestol

Norwegian School of Economics (NHH) - Department of Business and Management Science

Richard Sinding-Larsen

Norwegian University of Science and Technology (NTNU)

Date Written: February 09, 2015

Abstract

This paper considers sampling proportional to expected size from a partly unknown distribution. The applied context is the exploration for undiscovered resources, like oil accumulations in different deposits, where the most promising deposits are likely to be drilled first, based on some geologic size indicators (“creaming”). A size distribution within the Beta-class turns out to have nice analytical features in this context, and fits available data reasonably well, after rescaling. The theoretical and practical consequences for the accumulation of knowledge on the underlying distribution based on this scheme, named Beta-creaming, are explored in some detail.

Keywords: Beta distribution, sampling proportional to size, resource estimation

JEL Classification: C00, C10, C13

Suggested Citation

Lillestol, Jostein and Sinding-Larsen, Richard, Beta-Creaming (February 09, 2015). NHH Dept. of Business and Management Science Discussion Paper No. 2015/8. Available at SSRN: https://ssrn.com/abstract=2563479 or http://dx.doi.org/10.2139/ssrn.2563479

Jostein Lillestol (Contact Author)

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Richard Sinding-Larsen

Norwegian University of Science and Technology (NTNU) ( email )

Trondheim NO-7491
Norway

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